DECISION

Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards – Award stage – Group 4 – Aged Care Award 2010 – Substantive claims
(AM2018/13)

4 yearly review of modern awards – award stage – group 4 awards – substantive issues – Aged Care Award 2010.

[1] In a decision issued on 26 August 2019 1 (the August 2019 Decision) we decided to vary the Aged Care Award 2010 (the Aged Care Award) to increase the rates of pay for casual employees who work on weekends and public holidays.

[2] At the time of the August 2019 Decision the weekend and public holiday penalty rates in the Aged Care Award were ‘in substitution for and not cumulative upon the casual loading’ (clauses 23.2 and 29.2(c)(ii)). We decided to vary clauses 23.2 and 29.2(c)(ii), to ensure that casual employees receive the 25 per cent casual loading in addition to the penalty rates prescribed for weekend and public holiday work. We expressed the provisional view 2 that the increase in weekend and public holiday penalty rates for casuals would be phased in; in two instalments, the first on 1 December 2019 and the second on 1 July 2020.

[3] We also expressed the provisional view that the last dot point in B.4 of the current definition of the classification aged care employee level 4 be replaced with the following:

‘In the case of a personal care worker, holds a relevant Certificate 3 qualification (or possesses equivalent knowledge and skills) and uses the skills and knowledge gained from that qualification in the performance of their work.’

[4] Further, we expressed our intention to insert a notation at the title of Schedule B, as follows:

‘Note: Any dispute about the classification of a particular employee may be referred to the Fair Work Commission in accordance with clause 9 of this award.’

[5] A draft variation determination reflecting our provisional view was set out at Attachment C to the August 2019 Decision.

[6] Interested parties were invited to file submissions, in relation to the above provisional views and the draft variation determination, by Friday 20 September 2019. Any reply submissions were to be filed by 4pm Friday 4 October 2019.

[7] Submissions were filed by:

•  ABI and NSWBC – 20 September 2019

•  Aged Care Employers – 20 September 2019

•  HSU – 23 September and 4 October 2019

•  United Voice – 23 September 2019

[8] These matters were the subject of a hearing on 14 October 2019.

[9] It is convenient to deal first with the submissions in respect of our provisional view regarding the amendment of the last dot point in B.4 of the definition of aged care employee level 4 and the notation at the title of Schedule B. The relevant passages from the August 2019 Decision dealing with these issues are set out below: 3

‘We accept the submission advanced by ABI, and others, that it is an established feature of the classification structures in modern awards that ‘an employee should be classified based on the skills and experience of the employee, and the nature of the duties that the employee is required to perform.’ 4 As ABI put it:

‘While qualifications are of course relevant, implementing hard-and-fast rules that automatically deem a particular employee to be of a particular classification based on their holding a qualification, without any reference to the duties they are actually required to perform, is problematic and goes against the overall system of classifying employees and would lead to unreasonable outcomes.’ 5

The submission put is consistent with an observation by a Full Bench of the AIRC in Re: Hospitality Industry (General) Award 2010:

‘The basic concept that employees who have obtained and utilise relevant skills in their work should have those skills recognised and paid for within the classification structure is well established. It was an element of the structural efficiency principle of the late 1980’s which was directed, amongst other things, to “establishing skill-related career paths which provide an incentive for workers to continue to participate in skill formation.’ 6 (Emphasis added)

We note, as contended by United Voice, that there does appear to be a relationship between the level 4 personal care worker classification under the Aged Care Award and a level 3 home care worker under the SCHADS Award. The first pay point for a level 3 home care worker is $837.40 per week (the same as a level 4 personal care worker under the Aged Care Award) and the classification for this position at schedule E 3.5 of this award and notes:

‘Indicative but not exclusive of the qualifications required in this level is an accredited qualification to the position at the level of Certificate 3 and/or knowledge and skills gained through on-the-job training commensurate with the requirements of the work in this level.’

During the course of the hearing on 10 April 2019, we sought submissions as to whether it would be appropriate to adopt the language in Schedule E.3.5 of the SCHADS Award into the Aged Care Award. In response, ABI did not oppose such a variation provided that the formulation adopted contained the following elements:

(i) that the employee holds the qualification; and

(ii) that the qualification is relevant to the role performed by the employee; and

(iii) that the employee utilises the skills and knowledge derived from the qualification competencies in the performance of their work.

To the extent that the Commission was minded to broaden the relevant part of the Level 4 classification definition in the Aged Care Award to encompass employees who do not hold a certificate III qualification but who possess equivalent knowledge and skills, ABI submitted that the language in Schedule E.3.5 of the SCHADS Award ‘would appear to be appropriate, subject to one caveat’, namely the inclusion of the following Note:

Note: Any dispute about the classification of a particular employee may be referred to the Fair Work Commission in accordance with clause 9 of this Award. The Fair Work Commission may require an employee to demonstrate to its satisfaction that the employee utilises the requisite skills and knowledge, and that these are relevant to the work the employee is doing.

ABI note that this form of language appears at clause 3 of the Hospitality Industry (General) Award 2010 under the definition of “appropriate level of training” and submitted such a Note would be an appropriate inclusion, in the event that the Commission was minded to adopt the language in Schedule E.3.5 or something similar.

In relation to the proposition that the classification definition should encompass employees who do not hold the relevant qualification but who ‘possess equivalent knowledge and skills gained through on-the-job training’, ABI noted that this type of formulation is not an uncommon feature of classification structures in other modern awards and appears in a number of comparable awards. Schedule E.3.5 of the SCHADS Award is one of a number of such examples.  7

It is our provisional view that there is merit in deleting the last dot point in B4 of the current classification definition for an aged care worker level 4 and replacing it with the following:

‘In the case of a personal care worker, holds a relevant Certificate 3 qualification (or possesses equivalent knowledge and skills) and uses the skills and knowledge gained from that qualification in the performance of their work.’

We would also propose the insertion of a general note at the commencement of the classification definitions, as follows:

Note: Any dispute about the classification of a particular employee may be referred to the Fair Work Commission in accordance with clause 9 of this award.’

The proposed variation would better align the classification with level 3 in the SCHADS Award and more accurately depicts the qualification and skills required at this level. We also note that the formulation proposed is consistent with the interpretation of the current definition advanced by counsel for the Aged Care Employers:

‘We say that’s not the proper interpretation of the classification structure. We say that the words “is required” does not mean whether or not the employer requires it. We say that a proper construction is whether the nature of the role and the duties requires the qualification. Because the classifications are all about the nature of the work, the duties that are being undertaken and so when read properly in that context, the phrase there is talking about whether or not the nature of the work requires the qualification.’ 8’

[10] We turn first to the proposed change to the last dot point of the definition of aged care employee level 4 (at B4 in Schedule B). The current definition is as follows:

‘An employee at this level:

•  in the case of a Personal care worker, is required to hold a relevant Certificate III qualification.’

[11] As mentioned earlier, we also expressed the provisional view that the last dot point B.4 of the current definition of the classification aged care employee level 4 be replaced with the following:

‘In the case of a personal care worker, holds a relevant Certificate 3 qualification (or possesses equivalent knowledge and skills) and uses the skills and knowledge gained from that qualification in the performance of their work.’

[12] ABI ‘did not oppose’ the wording proposed to be inserted at B.4 on the basis that it ‘clarifies that the employee would be required to use the skills and knowledge gained from the qualification in the performance of their work’. 9

[13] The Aged Care Employers note that the provisional view ‘is consistent with’ the position they advanced at the hearing on 10 April 2019 that ‘the nature of the work or role that is performed by the employee dictates the requirement of a particular qualification, skill or type of experience, not employer discretion’. 10 On that basis the Aged Care Employers submit that they are ‘supportive of the intent behind the Commission’s provisional view’.

[14] The Aged Care Employers go on to submit that the Commission’s proposed amendment is ‘ambiguous’:

‘That is, without further defining “..possesses equivalent knowledge and skills …”, it is unclear whether an employee who does not hold a Certificate III but possesses some but not all of the equivalent skills and experience, would qualify for classification as an ACE 4.’

[15] To resolve the asserted ambiguity the Aged Care Employers propose the following amendment to the provisional view:

‘In the case of a personal care worker, holds a relevant Certificate 3 qualification (or possesses equivalent knowledge and skills) and uses all skills and knowledge gained from that qualification in the performance of their work.’ (Emphasis added)

[16] United Voice and the HSU support the provisional view and oppose the amendment suggested by the Aged Care Employers.

[17] We are not persuaded to adopt the proposal advanced by the Aged Care Employers. The change proposed goes well beyond the intention of the August 2019 Decision and the requirement that an employee use all of the skills and knowledge gained from a relevant Certificate 3 qualification creates a substantial, and unwarranted, hurdle to the classification of employees at this level. We confirm our provisional view and will vary the Aged Care Award accordingly.

[18] We now turn to the notation proposed to be inserted in Schedule B, before the classification definitions.

[19] ABI maintains its view that it would be beneficial to include the following words at the end of the notation, for clarification purposes:

‘The Fair Work Commission may require an employee to demonstrate its satisfaction that the employee utilises the requisite skills and knowledge, and that these are relevant to the work the employee is doing.’

[20] In support of the addition of these words ABI submits:

‘This wording is taken from clause 3 of the Hospitality Industry (General) Award 2010 and our clients consider that it would be useful in assisting employees and employers understanding in relation to the requirement for the employee to utilise the skills and knowledge in their role.’ 11

[21] The Aged Care Employers made no submission in relation to ABI’s proposal. The proposal was opposed by United Voice and the HSU.

[22] We are not persuaded that the change proposed by ABI is necessary for the award to achieve the modern awards objective. There is no evidence of any disputes arising in relation to the classification of employees. The fact that a note in similar terms is in the Hospitality Industry (General) Award 2010 is far from compelling; the circumstances in the sector covered by that award are quite different to those covered by the Aged Care Award. We confirm our provisional view and will vary the Aged Care Award accordingly.

[23] We now turn to the submissions in relation to our provisional view regarding the phasing arrangements in relation to the increase in weekend and public holiday rates for casuals.

[24] ABI seeks an extension of the proposed transitional arrangements and submits that the changes should commence operation on 1 July 2020 ‘to allow businesses time to arrange funding for this cost increase’. 12 In short, ABI seeks a deferred commencement date of 1 July 2020 at which time the changes would commence in full. In support of its position ABI submits:

‘We note the Commission’s observations at [151]-[152] that there is a low utilisation of casuals in the industry and that the variations would, on that basis, not result in a substantial cost. While that may be the case in the aggregate, the reality is that some employers have very low rates of casual employees, while there are other employers who utilise casual employees in far greater numbers. It is those businesses that will be impacted significantly.

Many employers are not-for-profit organisations and rely on funding from a range of sources to undertake their services. Those businesses are often required to adhere to very tight budgets for each financial year.

If the changes are made in accordance with the provisional view, many businesses will not be able to sustain the increase in monetary costs for the time period from 1 December 2019 to 30 June 2020.

This increase in labour costs, whether it is small for some employers and larger for others, was not taken into account when budgets were prepared in advance of this financial year, and will therefore be unsustainable without additional funding.

For those reasons, our clients submit that the changes should be implemented from 1 July 2020 to allow businesses time to arrange funding for this cost increase.’ 13

[25] During the course of oral argument at the hearing on 14 October 2019, Mr Scott, on behalf of ABI, supplemented ABI’s written submission and submitted that from a payroll administration perspective, a deferral with no phased instalments was a more appropriate and efficient means of giving effect to the Commission’s decision. 14

[26] The Aged Care Employers submit that ‘given the current financial constraints on Aged Care providers’ the proposed transitional arrangements should be extended, as follows:

[27] In support of this proposal the Aged Care Employers submit:

‘Aged Care Employers … are supportive of transitional provisions that softens the immediate financial impact of the Decision on Aged Care providers who are already operating in a financially constrained environment.

The funding issues currently facing the aged care sector are highlighted by the StewartBrown report for the 2018 financial year (previously tendered by ABI). The report details:

(a) 45.1% of residential facilities recorded a negative operating result (EBT); and

(b) 63.5% of outer regional, rural and remote facilities recorded an EBT loss and 37% are operating at a cash deficiency.

Aged care providers have already formulated and implemented their budgets for the current financial year based on the Award in its current form. This Decision, if effected during the current financial year, will result in increased costs, which have not been forecast and will place further pressure on organisations who are already operating at a cash deficiency.’ 15

[28] In its reply submission the HSU dealt with the Aged Care Employers reliance on the StewartBrown reports noting that leave was not granted to file these reports in the proceedings. We agree with the HSU, this issue was determined at [34]-[35] and [41] of the August 2019 Decision:

‘We conclude this part of our decision by dealing with an application by ABI for leave to file two publications by an entity called ‘StewartBrown’. The publications contain data relating to the financial performance of businesses in the Aged Care industry and both publications are both titled “Aged Care Financial Performance Survey Sector Report“ One report is for the 2018 financial year and the second for the six months ended December 2018. The application to file the material was made late during the course of the oral hearing on 10 April 2019.

In a submission filed on 12 April 2019 ABI invited us to make the following findings or conclusions having regard to the two StewartBrown publications:

1. That the current funding model for Aged care is under significant financial strain.

2. That the residential aged care sector experienced a decline in financial performance due to revenue issues in 2017/18 and in the second six months of 2018.

…

Having considered the matter, we have decided not to grant leave to file the material. This material was filed at a late stage in the proceeding and the Unions have not been afforded an opportunity to cross-examine the authors of the reports. Fairness dictates that leave to file the material be refused. We would also observe that the findings or conclusions sought to be drawn from the reports are very broad, lack specificity and ABI has not established the causal connection between the data and the proposed findings.’

[29] During the course of oral argument at the hearing on 14 October 2019 the Aged Care Employers acknowledged that the StewartBrown publications had not been admitted in the principal proceedings and withdrew their reliance on that material. 16 The Aged Care Employers submit that the further transitional period they propose is appropriate having regard to:

•  the reforms that have impacted on the industry;

•  the Royal Commission into Aged Care Quality;

•  increasing financial pressures on employers in the sector, particularly in regional and remote areas; and

•  a large proportion of the sector are ‘not-for-profit’ and are reliant on concessional residents to fund their businesses. 17

[30] The HSU and United Voice support the proposed transitional arrangements.

[31] The HSU opposes the proposals by ABI and the Aged Care Employers for further delays to the implementation of these increases and submits that the provisional timetable provides:

‘a reasonable period of time for employers to adjust to the changes, particularly as it only affects casual employees. Employers have a great deal of flexibility in how and when casual employees are engaged …’

‘Any further delays would mean that casual employees will not be provided with a fair and relevant safety net for an extended period of time. This will adversely impact casual aged care employees who will receive lower incomes than they should be entitled to.’ 18

[32] United Voice advanced a similar submission; adding that if the Commission was minded to depart from its provisional view (a course of action which it opposed) then it was preferable that the changes be introduced in one tranche, rather than by instalments.

[33] In the Penalty Rates – Transitional Arrangements decision 19 the Full Bench made the following observation about the determination of transitional arrangements:

‘the determination of appropriate transitional arrangements is a matter that calls for the exercise of broad judgment, rather than a formulaic or mechanistic approach involving the quantification of the weight accorded to each particular consideration.’ 20

[34] The Full Bench went on to observe that the following matters were relevant to its determination of transitional arrangements in relation to the reduction of penalty rates.

(i) The statutory framework: any transitional arrangements must meet the modern awards objective and must only be included in a modern award to the extent necessary to meet that objective. The Full Bench also noted that it must perform its functions and exercise its powers in a manner which is ‘fair and just’ (as required by s.577(a)) and must take into account the objects of the Act and ‘equity, good conscience and the merits of the matter’ (s.578).

(ii) Fairness is a relevant consideration, given that the modern awards objective speaks of a ‘fair and relevant minimum safety net’. Fairness in this context is to be assessed from the perspective of both the employees and employers covered by the modern award in question. The Full Bench said “while the impact of the reductions in penalty rates on the employees affected is a plainly relevant and important consideration in our determination of appropriate transitional arrangements, it is not appropriate to ‘totally subjugate’ the interests of the employers to those of the employees”. 21

[35] We adopt the above observations and propose to apply them to the matter before us. In the August 2019 Decision we expressed the provisional view that the increase in the weekend and public holiday penalty rates for casuals should be phased in as follows:

[36] As mentioned in the August 2019 Decision we accept that these variations will increase employment costs and to the extent that fulltime or part-time permanent employees are substituted for casuals, the variations may reduce flexibility. We also acknowledge that many employers covered by the Aged Care Award are not-for-profit organisations who rely on funding from a range of sources to provide their services. An increase in employment costs within a budget cycle may place such organisations under financial pressure.

[37] The assertion by ABI that ‘many businesses will not be able to sustain the increase in monetary costs’ for the time period from 1 December 2019 to 30 June 2020 as they are often required to adhere to ‘very tight budgets for each financial year’, was uncontested.

[38] Against these considerations is the fact that the low utilisation of casual employees in the sector (likely to be less than 10 per cent) suggests that the cost impact of the variations is not likely to be substantial, at least not in an aggregate sense. We accept, as put by ABI, that employers who utilise casual employees in greater numbers will be impacted more significantly.

[39] The fact that most of the classifications covered by the Aged Care Award are ‘low paid’ within the meaning of s.134(1)(a) is a consideration in favour of not deferring or phasing-in these variations.

[40] Further, in the August 2019 Decision we accepted that the existing rates for casuals working on Saturdays, Sundays and public holidays are not fair and proportionate to the disability experienced by casual employees working at these times. This too is a consideration which tells against the deferral or phasing in of the variations.

[41] In our view, an appropriate fair and just balance between these considerations is to provide that the increases in weekend and public holiday rates for casuals will commence operation, in full, from 1 July 2020.

[42] We will shortly issue a variation determination giving effect to this decision.

PRESIDENT

Appearances:

S. Bull for United Voice

R. Liebhaber for HSU

K. Scott for ABI & NSWBC

J. Field for Leading Aged Services Australia

A. Wade for Aged & Community Services

Hearing details:

Sydney

2019

14 October 2019

Printed by authority of the Commonwealth Government Printer

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 1   [2019] FWCFB 5078

 2   Ibid at [202]

 3   [2019] FWCFB 5078 at [83] – [92]

 4   ABI submission at 6.6

 5   Ibid, at 6.7

 6   [2009] AIRCFB 967 at para [33]

 7   See, for example, Schedule B.1.4 of the Health Professionals and Support Services Award 2010; Schedule B.1.4 of the Children’s Services Award 2010

 8   Transcript 10 April 2019 at [531]

 9   ABI submission at 2.3

 10   Aged Care Employers submission at [4]

 11   ABI submission at 2.5

 12   ABI submission at 3.9

 13   ABI submission at 3.5 – 3.9

 14   Transcript 14 October 2019 at [62] – [69]

 15   Aged Care Employers submission at 10

 16   Transcript 14 October 2019 at [70] – [71].

 17   Ibid at [75]

 18   HSU submission in reply 3 October at 4 and 6

 19   [2017] FWCFB 3001

 20   Ibid at [142]

 21   Ibid at [148]